Treasury warned off lottery cash

The first real evidence that the Treasury is seeking to divert National Lottery cash into core areas of government spending emerged last night with the leak of Cabinet correspondence about arts funding, writes Donald Macintyre.

A letter sent by Virginia Bottomley, Secretary of State for National Heritage, last month reveals she is resisting pressure from William Waldegrave, the Chief Secretary to the Treasury, to use lottery revenue for a trust to fund currently state funded arts projects.

It was known that the Treasury was prepared to cut across government commitments that lottery funds would be used to supplement rather than replace state funding. But the ferocity of Mrs Bottomley's letter shows that the Treasury is still pushing the idea of diverting lottery funds to the heritage department's pounds 300m arts programme.

Mrs Bottomley says in a letter to the Treasury that Mr Waldegrave's proposal is "not a runner". She adds: "It would contradict the many assurances we have given that lottery money would not be used to relieve the Government of its existing obligations. This commitment has been repeatedly given by members of the Government ... The Opposition would milk the broken promised theme for everything they can get."